Starting any kind of new business is always difficult, but a food business has some unique challenges. Stock control to avoid wastage is very important, and you will need to do some serious research to get your stock levels, products, and other details exactly right. If you’re starting a food business, here are some top tips to help you on your way.
- Do your market research. If you have an idea, you need to test its viability. Is there a market for what you’re thinking of doing. If the market is already saturated, how does your idea differ to whatever is already in the market? Is the idea you have for a product one that can be sold online and shipped? You need to consider legalities, for example with liquor, fragility, and shelf life, such as whether it will need refrigeration.
- Plan where you’ll get ingredients. When you’re still new and producing small batches, it can be more cost-effective to buy your ingredients at consumer warehouse club stores, like Costco. You could find suppliers through word of mouth and personal introductions. Network to make these introductions. If you need ingredients like coffee beans, look for a broker or distributor who works directly with farmers. Team up with other small-batch producers to purchase in bulk together to save money without wastage.
- Get your packaging right. Selling online is challenging for food, as the most important part of the decision-making process, taste, isn’t available. Customers can’t sample your product, so branding is even more important. Package design, photography, the website, the best fonts for logos, product page, and the copy all need to work to tell customers who you are and how the product might taste. The packaging is critical, so hire a designer. Packaging needs to have visual appeal, but remember that every country has laws about labeling, which might include best-before dates, nutritional information, allergen warnings, and country of origin. If you plan to ship internationally, make sure your packaging meets the country’s rules.
- Get your prices right. One of the biggest challenges for new retailers is pricing. Pricing is hard. There’s no pricing formula that will work for everyone. Know your costs, and adjust your pricing until you get it right. When you first start out, you might have to forget making a profit to start with in order to get your product in front of as many customers as possible. If you believe in your product, you should price it accordingly. Trust that people will pay for quality. Profit margins for food businesses will depend on many factors. The profit margin will depend on what you sell, or how and where you’re selling. Restaurant margins are usually low, whereas meal-kit services sold online can have much larger margins.
There’s a lot of planning and decision making to be done before you start an online food business. You need to get your product and your marketing right if you’re going to succeed and make a profit.
